What We Think: Online sales tax would level playing field

It is time for states to begin col­lecting sales tax on Internet pur­chases. This is a potential source of revenues for cash-strapped states that has remained untapped for too long.

Last week, the U.S. Senate passed the Marketplace Fairness Act, which would allow states the option of col­lecting taxes from Internet and cata­log sellers.

The bipartisan bill, which passed the Senate 68 to 27, must go to the U.S. House of Representatives next for consideration.

If it becomes law, the Marketplace Fairness Act would reverse a 1992 U.S. Supreme Court decision that forbids states from collecting taxes on catalog or Internet sales from sellers outside their borders, according to an article in USA Today.

In the meantime, an estimated $800 million in sales taxes goes uncollected in Louisiana each year, according to information in an email response from the office of U.S. Sen. Mary Landrieu, D- La.

That would be a welcome shot in the arm for this state, which has suffered cutbacks in recent times to essential areas like health care and education.

The tax revenues could also help pay for roads and to support services like fire and police departments, ac­cording to a spokesperson in Lan­drieu's Washington office.

Landrieu's position is that it would level the playing field between in-state businesses, which must pay sales tax­es, and out-of-state vendors, which currently do not.

While Landrieu was among the 68 senators who voted for the bill, U.S. Sen. David Vitter, R-La., opposed it, calling the measure an "effective tax increase," in an email response to The Daily Advertiser last week.

Vitter said businesses "would have to deal with thousands of different taxing jurisdictions around the coun­try with their own sales tax rates."

The complexity of collecting and remitting taxes to states around the nation was the driving force for the Supreme Court decision in 1992. But that was decades ago and computers, which make online sales possible, also make it easier to comply.

The act requires states to simplify their tax codes and to provide to re­tailers at no charge software that would assist in tax collection, accord­ing to USA Today.

In addition, there is a small busi­ness exemption for vendors that have less than $1 million a year in sales.

But some vendors say the number should be higher - at least $10 mil­lion.

Smaller online vendors say having to charge sales tax would make them less competitive, because they would have to raise their prices to cover the administrative costs of collecting and remitting taxes.

There has already been some back­lash among small online businesses, according to USA Today. Some have made plans to reduce their volume of sales so the total annual amount they take in will be less than $1 million, qualifying them for the exemption.

Many business associations are re­maining silent on the issue, at least for now, including the Louisiana Business and Industry, which has not taken a position on the issue, as yet.

Despite the complexities and hur­dles, it is an idea whose time has come, when local businesses must compete every day with online ven­dors across the country.

And these days, Louisiana can't af­ford to turn down hundreds of millions of dollars in potential revenues.

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What We Think: Online sales tax would level playing field

It is time for states to begin col­lecting sales tax on Internet pur­chases. This is a potential source of revenues for cash-strapped states that has remained untapped for too long.Last week, the U.S.